After announcing a 75% capex cut, Devon Energy Corp. (NYSE: DVN) took aim and fired—after insisting it didn’t need any additional financial firepower.

The Oklahoma City company said Feb. 17 it will commence an equity offering, which analysts project could raise more than $1 billion in proceeds and cover its balance sheet concerns.

Following its $2.5 billion acquisition in the Anadarko and Powder River basins in December, Devon planned to prune its portfolio. The company aimed for asset sales between $2 billion and $3 billion, starting with its 50% stake in the Access Pipeline in Canada. The midstream divestiture is expected to command a $900 million to $1 billion asking price.

However, Devon’s equity offering should remove any worries about the company’s dependence on asset sales in the current low commodity environment, said Charles Robertson II, analyst with Cowen and Co.

"With this offering, Devon need only to complete the Access Pipeline sale," Robertson said in a report.

Devon will offer 69 million shares of its common stock, upsized from 55 million, to the public for $18.75 per share. Goldman Sachs & Co. is book-running manager for the offering, which includes a 10.35 million share greenshoe option. The company has roughly 411 million shares outstanding as of its last quarterly report.

"This is a surprise following Devon’s earnings call during which management firmly expressed confidence in the $2 billion to $3 billion divestiture target and shrugged off the need to issue equity when asked multiple times," Tudor, Pickering, Holt & Co. (TPH) said in a report.

TPH estimates proceeds will total about $1.47 billion, including the greenshoe. Proceeds are planned to bolster the company's liquidity position, reduce debt and fund its $900 million to $1.1 billion 2016 capital program. The company does not have hedging on oil or gas production, according to Wells Fargo Securities LLC.

The stock offering provides Devon a funding backstop should cash flow tighten more than expected and/or asset sales are prolonged, Robertson added.

The company has $12.1 billion in debt with $350 million due in December 2016. “Beyond that, the next debt maturities are in 2018 for two bonds totaling $875 million,” Robertson said.

No ‘Fire Sale’

Devon has hired advisers to help sell the $2 billion to $3 billion in noncore assets.

The company’s sale of the Access Pipeline, a heavy oil transportation pipeline network serving northeastern Alberta, is expected to close in first-quarter 2016. TPH anticipates proceeds to be about $1 billion.

Devon’s upstream divestitures will include up to 80,000 barrels of oil equivalent per day of production from properties in the Midland Basin, East Texas and Midcontinent region. Key targets include:

  • 15,000 net undeveloped acres in Martin County, Texas;
  • Southern Midland Wolfcamp;
  • Carthage Field in Panola County, Texas;
  • Granite Wash; and
  • Mississippi Lime.

Devon's vice president of communications, Howard Thill, told Reuters that the targeted asset sales will not be conducted as a “fire sale.”

“If we do not receive good value for an asset, we will defer the sale of that asset until a later date,” Thill said according to Reuters.

Devon has already closed the sale of interests in one of its storied assets in the San Juan Basin—the Northeast Blanco Unit (NEBU). The company sold the NEBU interests to BP Plc (NYSE: BP) in December for an undisclosed amount.

RELATED: BP Buys Devon Energy’s Long-Held San Juan Coalbed Methane Assets

According to TPH, the sale of Devon’s Access pipeline stake and noncore E&P assets will plug the company’s estimated 2017 cash flow outspend and further reduce net debt.

Other E&Ps, such as Noble Energy Inc. (NYSE: NBL) and Marathon Oil Corp. (NYSE: MRO), have signaled their intent to pick up the pace of divestitures to help balance sheets and liquidity.

Noble could “monetize additional assets” to give the company flexibility in the volatile price environment, David Stover, Noble's chairman, president and CEO, said on a Feb. 17 post-earnings call.

Noble's asset sales could include midstream assets or a portion of its interest in the Tamar gas field off the coast of Israel, Stover said, according to a Seeking Alpha transcript.

Emily Moser can be reached at emoser@hartenergy.com.

RELATED: Core Overload? Devon’s Powder River, Anadarko Deals Knock Back Stock